The Irish Presidency: Priorities and Pitfalls

Back in June 2004 Bertie Ahern was showered in adulation by his European counterparts.

Ireland had just successfully negotiated the mammoth EU Constitution using its storied negotiating skills to reconcile vastly conflicting agendas – big countries versus small ones, voting rights at the Council of Ministers, the size of the European Commission, how to bridge an alarming democratic deficit.

At the end of the process the Treaty was signed in Rome and EU leaders congratulated themselves on settling Europe’s fraught institutional arrangements for at least 50 years.

Peace, prosperity, and social inclusion beckoned …

As Ireland takes the helm seven years later how different – even naïve – that juncture appears.

French and then Dutch voters first rejected the constitution in referenda, and then Irish voters promptly rejected its successor, the Lisbon Treaty.

By the time Irish voters were offered a second bite of the cherry Europe was in crisis.

Amid the fallout from Lehman Brothers, Greece was found to be cooking the books and disguising a budget deficit that was three times its hitherto official level.

There followed a debt crisis which triggered a continuing economic crisis. Europe will struggle to find meaningful growth for at least the next half decade.

According to figures released by the Department of the Taoiseach, Ireland spent €110 million on the 2004 presidency. This time round they expect to spent a little over half that.

There are other reasons why this presidency will be different.

Under the Lisbon Treaty the prime minister of a rotating presidency no longer chairs EU summits – that role is played by European Council President Herman Van Rompuy – so Enda Kenny won’t play a key negotiating role.

However, he will be closely involved with President Van Rompuy, and may even be called upon to use his working relationship with David Cameron to prod the British prime minister into a more flexible posture ahead of the upcoming negotiations on the seven-year EU budget.

There are significant pressures on Ireland to deliver a good presidency. Already the agenda is cluttered with big and controversial issues and there is a feeling in some quarters that the inexperienced Cypriots failed to close off enough pieces of legislation during their outgoing presidency.

That means there’s a backlog of EU laws which Irish ministers will need to finalise.

“We’re regarded as a country which runs a very efficient presidency,” says Ireland’s Commissioner Máire Geoghegan-Quinn, “where the public service is top class in organising meetings, doing the background work, and where ministers have really prepared.

“They have spent their time since coming into government, meeting their colleagues in the commission, meeting the committees in the European Parliament.”

The EU budget

This will be the first big challenge of the presidency.

Back in November, EU leaders failed to agree on the size of the cuts to the €1 trillion budget, which will run until 2020, so it has fallen into the Irish presidency.

Leaders need to find an extra €30 billion odd to bridge the gap between UK demands for a smaller budget and calls by France and other countries for programmes such as the Common Agriculture Policy (CAP) and Cohesion funding to be maintained.

Expectations have been that the deal would be done at a summit on 7 and 8 February, but there are rumours that it could drift into March.

An early deal on the budget – known as the Multi-annual Financial Framework, or MFF – could give Dublin badly needed momentum, but failure will significantly complicate how things progress over the six months.

The euro and bank debt

Strictly speaking, Finance Minister Michael Noonan will not have as prominent a role as other ministers.

Gatherings of the 17 eurozone finance ministers, known as the eurogroup, are chaired on a full-time basis by Luxembourg Prime Minister Jean-Claude Juncker, who will retire at the end of the Irish presidency.

Any deal for Ireland on securing funding from the permanent bailout fund, the European Stability Mechanism (ESM), is unlikely to be reached during the presidency.

That’s because eurozone heads of government have concluded that the ESM cannot directly recapitalise banks until a new EU bank supervision system – known as the Single Supervisory Mechanism (SSM) and run by the ECB – is up and running, and operating effectively. Germany says it will be well into 2014 before that happens.

In any event, the decision to inject money into banks will ultimately be taken by the board of governors of the ESM (in other words, the 17 finance ministers).

Even if they were to take that decision over the next six months, Mr Noonan would not be in the chair.

Also, within the Irish presidency eurozone member states are required to clarify how the ESM should treat legacy bank debts, including the definition of what legacy debt actually is. Again, the eurogroup is likely to be the main body involved.

On the other hand, Mr Noonan will be chairing Ecofin meetings (ie, all 27 finance ministers) and they will be instrumental in taking key steps towards a banking union, such as ensuring member states have harmonised as far as possible a system of shutting down insolvent banks as a precursor to the creation of an EU bank resolution authority.

It is a moot point the extent to which Ireland can really push the bank debt issue during the presidency.

“Especially when it comes to the setting up of the Single [bank] Supervisory system which is a pre-requisite if you want to have the direct recapitalisation of banks.

“Here obviously the Irish have an interest, but it’s also other member states which have an interest so if [Ireland] is pushing I don’t that will create a negative effect or impressions because this is one of the major topics on the agenda.”

While some Government ministers have been quite blunt about using the presidency to secure a deal on bank debt, Minister for European Affairs Lucinda Creighton strikes a cautious note.

“There’s a fine line. If you’re seen to be simply looking after your own agenda you’ll very quickly lose the support of your colleagues and you need to support of colleagues to make things happen, so I think we have to be clever in the way we manage the agenda and how we behave as the chair.

“We have to be impartial, but of course we have clear priorities and we have to move them forward,” she says.

There’s no doubt that the higher profile of Ireland, and the proximity of ministers and the Taoiseach to the centres of European power can’t hinder the lobbying efforts.

In recent weeks there have been clear signals that the Government expects a deal on Anglo Irish promissory notes to be done before 31 March. That’s an issue that is strictly speaking a bilateral one between Ireland and the ECB and away from the glare of the Irish presidency.

Although any progress is contingent on a deal forged between officials in the Department of Finance, the ECB and the European Commission – one which won’t inspire other member states to seek something similar – it is almost certain that the Government will exploit its presidency role to grip elbows or whisper exhortations in the corridors of Brussels.

CAP reform

Simon Coveney probably has the biggest challenge. The Minister for Agriculture and Fisheries has two major dossiers to conclude, reforming both CAP and the Common Fisheries Policy.

He wants a political agreement by June on CAP reform but to do so he’ll need an early agreement on the seven-year budget.

There are indications that many interests want to avoid a deal on the reform and will be happy to use the budget talks delay to drag things out.

If a key vote in the European Parliament is delayed, there is virtually no chance for Mr Coveney to succeed, but if he manages then he’ll hope it burnishes his future Fine Gael leadership credentials.

But as always the presidency is a double-edged sword: What is good for Europe may not be good for Irish farmers.

Trade

The European Commission has the lead role in trade negotiations but it is mandated by the member states (in November the Council was given a mandate for a free-trade agreement with Japan).

Agreements between the EU and Singapore, Korea, Columbia and Peru have already been closed, while a deal with India could be done in 2014.

But the big trade negotiations are with Japan and the US. A trade deal on both fronts would represent two thirds of the economic benefit of all the EU’s trade agreements.

In numerical terms, they could add €120 billion to the EU economy and €100 million to Irish economy.

The EU-US agreement is more about regulatory standards and non-tariff barriers. Diplomats say that the only way it will work is if it is ambitious. The problem is that Europe’s reputation in the US Congress is currently poor. Furthermore President Obama is thought not to be hugely interested in free trade agreements.

If things go according to plan an informal meeting of trade ministers in Dublin in April could deliver a mandate to the European Commission, with Ireland then setting out a roadmap for comprehensive trade agreement.

“It won’t be easy by any means, but the potential gains are significant,” says Minister for Jobs, Enterprise and Innovation Richard Bruton, who will be chairing those talks.

How might Ireland benefit from an EU-US trade deal?

The benefits of a deal are mostly on the non-tariff side, ie public procurement, recognition of products, removing the need for dual standard recognition and cost reduction.

Ireland already has a strong foothold in the US in the software, pharmaceutical and food sectors (although all EU beef and lamb, including Irish meat, is still under an import ban going back to the BSE crisis).

With a deal Irish companies would be able to grow their business in the US faster and further (although public procurement contracts tend to be complicated by the federal system and alcohol exports are held up by monopoly acquisitions).

An EU-Japan deal could add €42 billion to trade between the two trading blocs resulting in some 420,000 extra jobs. Ireland has good prospects for exports to Japan in the software and food technologies sector, although at present it represents less than 3% of our agri-food exports.

In 2011, Ireland exported €1,743 million in merchandise and €1,515 million in services to Japan.

The Single Market

Since the Irish presidency’s slogan is Stability, Jobs and Growth, there will be a big emphasis on how to reduce the roadblocks holding up the EU’s single market in goods and services.

The European Commission has identified 12 areas which, if tackled, could be essential for desperately needed economic growth. So far only one of those measures – standardisation of products – has been passed.

There are three areas the Government wants to focus on.

1. Professional qualifications: The existing directive allows professionals to move around the EU, but member states still find barriers to inhibit the free movement of workers (in Austria, for example, you cannot become a gardner unless you hold a professional Austrian gardening qualification).

The Irish presidency is anxious to promote further harmonisation of entry requirements, including the creation of a professional “card” which allows holders to register their qualifications online.

2. Public procurement: Public tenders handed out by member states represent 19% of Europe’s economic growth. There is an existing directive, but again member states are still finding ways to prevent outside companies from bidding for tenders.

Much of the problem is due to language: Ireland and the UK are the most open because competitors from other member states can read the tenders in English.

A tender issued in Bulgaria, for example, will only be published in Bulgarian, so that effectively excludes outside operators.

Even companies that do succeed can often encounter problems. Irish companies Siac and Sisk are still in legal discussions with the authorities in Poland over unpaid bills.

3. Posted workers: There’s an existing directive which lays down rules over the rights of workers in one country to be sent to work on contracts in another, but due to a number of Court of Justice rulings (most notably the Laval case) the European Commission has issued a new directive which sets out to define what a posted worker is, what the obligations are, and what countries can demand.

“It’s a very divisive issue,” says one EU diplomat. “Member states are split down the middle, with France at one end of the argument and Poland at the other.”

Digital agenda

This will be a high priority for Ireland’s presidency, given the importance the Government attaches to the hi-tech sector for economic recovery.

There are a number of key items still holding up progress on enhancing Europe’s digital flair.

There is still no European Copyright law and that means it’s impossible for start-ups to easily sell images or films across the EU.

Copyright law is even more contentious than the EU single patent system (that has taken 40 years to realise).

The UK and Ireland have a more liberal approach to selling digital work, while France cherishes much stronger holder rights.

The Government will also come under pressure to push forward the EU agenda on high-speed broadband.

As always when such ideas are mooted at EU-level member states tend to cry foul, insisting that this is something for national capitals alone to decide.

In June, the Government will hope to showcase Ireland’s hi-tech prowess with a Digital Assembly in Dublin – 2,000 movers and shakers from the global digital economy have been invited to the event.

Enlargement and External Relations

Although Croatia formally becomes the 28th member state the day after Ireland’s presidency ends (1 July), the Balkans will feature over the next six months.

The big issue will be when the EU grants Serbia a date to begin negotiations towards its eventual membership, an issue complicated by Belgrade’s attitude to Kosovo.

The question of Macedonia’s future membership is also fraught because of the same issue (Greece, which has a historical region named Macedonia, is determined to prevent the Balkan country entering the EU with a similar name).

On the issue of Turkey, new French president Francois Hollande is likely to soften the implacable opposition of his predecessor Nicolas Sarkozy to eventual Turkish membership, but it’s unlikely there will be any major advances while Ireland holds the presidency.

On the EU’s wider foreign policy brief, the supreme role is played by Catherine Ashton, who heads the European External Action Service (EEAS), another creation of the Lisbon Treaty.

That means she normally chairs meetings of EU foreign ministers, but in her absence (a frequent occurrence) Eamon Gilmore, Lucinda Creighton or Joe Costello will take her place.

The issues that have dominated this year are likely to continue: the continuing conflict in Syria, Iran’s nuclear threat, the deadlock between the Israelis and Palestinians, Egypt and the fallout from the Arab Spring, and so on. An informal meeting of foreign ministers will take place in Dublin on Friday 22 and Saturday 23 of March.

Energy and Environment

Pat Rabbitte will chair a number of key meetings on developing Europe’s single energy market (consumers across the EU are still paying high prices for electricity and gas), on whether or not Europe will set new deadlines for the use of renewable energies between 2020 (member states are deeply divided on this issue), and on the sustainability of biomass as a renewable resource ( a communication on this issue is awaited from the European Commission).

“A great deal of the agenda we’ll be dealing with will be ultimately about getting a better deal from the consumer,” says Minister Rabbitte, “having a more connected and integrated single market in terms of electricity and gas, and in addition that there is a definite spin off in terms of job creation.”

The Government is also likely to come under pressure to prevent the over-exploitation of viable food producing farmland by the biofuel industry.

Dublin wants to see the energy issue in terms of the overall theme of “jobs and growth” and will be anxious to promote areas where information technology can be developed within the energy sector in order to create jobs.

The EU is keen to develop renewables such as wind energy, but the issue is bogged down in whether or not governments, or the EU, should provide so called “standby payments” to producers prone to peaks and troughs of wind energy.

An informal meeting of EU energy ministers will take place in Dublin on April 23 and 24.